Outset Medical's shares experienced a significant decline following the release of lower-than-expected preliminary third-quarter revenue numbers. The San Jose-based medical technology company also issued a warning about reduced capital spending in the upcoming fourth quarter.
Stock Plummets
After the disappointing results were made public, Outset Medical's stock fell by 34% to $4.45 during after-hours trading, compounding an 11% drop in value at the close of Thursday's trading session. Overall, the shares have experienced a staggering 74% decrease in value this year.
Revenue Falls Short of Expectations
Preliminary results showed that Outset Medical's revenue for the third quarter increased by only 9% to $30.4 million. This figure fell short of the analysts' forecast of $36 million, according to FactSet data. Furthermore, the company has downgraded its full-year revenue guidance from $140-150 million to $130 million, well below the FactSet consensus estimate of $144.6 million.
Challenges Faced
Outset Medical CEO Leslie Trigg attributes the disappointing results to a higher-than-anticipated impact from a recent warning letter issued by the Food and Drug Administration (FDA). Additionally, the company expects headwinds from cautious capital spending in the final quarter of the year. Despite these setbacks, Outset Medical remains confident that it will not lose any deals in its pipeline.